Health Plan Weekly

While Humana Inc., like other health insurers, has seen its profits swell as members avoided non-coronavirus-related care during the pandemic, the company is making it crystal clear that those financial gains will be erased before the year is over — even if the use of medical services doesn’t fully bounce back.

“We continue to expect our results for the second half of 2020, including an anticipated loss in the fourth quarter, to entirely offset the significant outperformance experienced in the first half of the year that resulted from historically low medical utilization levels,” Chief Financial Officer Brian Kane said during Humana’s Nov. 3 earnings call to discuss third-quarter results, according to a transcript from The Motley Fool.

A final rule published on Oct. 29 requires health insurers and health plans in the individual and group markets to reveal the rates they negotiate with providers for health care services. The regulation was condemned by insurers, who argued it would drive up prices, but praised by one interest group representing self-insured health plans, which asserted the rule will improve competition and lower premiums. Industry experts say it’s too soon to draw across-the-board conclusions about the rule’s impact, and observe it is ripe for legal challenge.

To comply with the rule, starting on Jan. 1, 2023, health plans must offer members online shopping tools that allow them to see the negotiated rate between their provider and their plan, as well as a personalized estimate of their out-of-pocket cost for 500 of the most shoppable items and services. Effective one year later, those shopping tools will have to show the costs for all remaining items and services. Insurers must also meet a Jan. 1, 2022, deadline to “make publicly available standardized and regularly updated data files, which would open new opportunities for research and innovation to drive improvements within the healthcare market.”

With the outcome of the presidential contest still technically up in the air, perhaps the most consequential outcome of the 2020 general elections for the health insurance industry is that no one political party is likely to control the White House and both chambers of Congress.

Officially, the new makeup of Congress may not be cemented until a runoff election takes place in Georgia for one or more Senate seats, yet as of press time it appeared that Democrats will retain control of the House of Representatives while Republicans will hang on to a slim majority in the Senate. Meanwhile, as of press time former Vice President Joe Biden and President Donald Trump were both still in the running to win control of the White House, though Biden was winning in the electoral-vote tally and took the lead in some key battleground states.

✦ CMS on Oct. 29 finalized its insurer price transparency rule, drawing quick rebukes from the industry. The rule will require plans, starting on Jan. 1, 2023, to offer online shopping tools “that will allow consumers to see the negotiated rate between their provider and their plan, as well as a personalized estimate of their out-of-pocket cost for 500 of the most shoppable items and services.” Effective one year later, those shopping tools will have to show the costs for all remaining items and services. Insurers must also meet a Jan. 1, 2022 deadline to “make publicly available standardized and regularly updated data files, which would open new opportunities for research and innovation to drive improvements within the healthcare market.” America’s Health Insurance Plans said in a statement that by forcing insurers to reveal negotiated rates, “the final rule will work to reduce competition and push health care prices higher — not lower — for American families, patients, and taxpayers.” The rule was first proposed in November 2019 (HPW 11/25/19, p. 1). Visit https://go.cms.gov/37SEc3Z.

✦ The health systems Intermountain Healthcare and Sanford Health, which both operate insurance plans, said on Oct. 26 that they are planning to merge. Citing a desire to “further implement value-based strategies and realize economies of scale” as their motivation for combining, the two not-for-profit organizations said they expect their deal to close in 2021, pending federal and state approvals. Intermountain Healthcare-owned SelectHealth covers a total of 903,370 medical lives, and Sanford Health Plan covers 200,515, according to AIS’s Directory of Health Plans. During a call with reporters, Sanford Health CEO Kelby Krabbenhoft indicated that growing the organization’s health plan was a primary motivator for the deal, according to FierceHealthcare. Read more at https://bit.ly/3mqxOoE and https://bit.ly/3jyMQqB.

Anthem, Inc.’s third-quarter 2020 earnings were not as robust as investors had hoped at the start of the year due to the insurer’s obligation to pay out its $594 million share of a recently settled lawsuit against Blue Cross Blue Shield plans. Despite that, Wall Street analysts were positive about the firm’s outlook for the rest of the year.

The insurer reported that its quarterly adjusted net income was $4.20 per share, which Citi analyst Ralph Giacobbe said beat a Wall Street consensus projection of $4.12. Anthem CEO Gail Boudreaux said during an Oct. 28 earnings call that the earnings per share (EPS) figure was down 14% year over year. Anthem posted a medical loss ratio (MLR) of 86.8%, which Giacobbe noted was lower than a consensus 87.2%. Anthem’s revenues increased by 15.9% year over year to $30.6 billion, which Chief Financial Officer John Gallina attributed largely to growth in the firm’s Medicare and Medicaid businesses. The firm projects end-of-year earnings to exceed $22.30 per share.